PESA 2014 business review

Abstract

This review looks back at 2014 from a business context and considers where the Australian petroleum industry will be placed in 2015.

Globally, there were a number of major developments in 2014. These included new supply sources (e.g. PNG LNG), exploration successes (e.g. Brazil), and evolving energy export policies that have been set to change the market (e.g. US, OPEC). Russia agreed to a major gas supply agreement with China, and access to talent remained an issue.

In Australia, there were a number of developments that shaped the business agenda, including:

1. Capital projects—Prelude, QCLNG, and many others—achieved major milestones such as first LNG production.

2. There were ongoing cost increases in capital projects.

3. From a tax perspective, the Petroleum Resource Rent Tax (PRRT) was not renounced, and a decision was made on Browse royalties.

4. Operators were busy with commissioning teams and preparing to operate new assets.

5. Boards debated capital management, notably the AU$200 billion of projects in pre-FID and asset divestments.

6. Exploration, notably for onshore east coast regulations in NSW and Victoria.

7. The opening of the Wallumbilla gas supply hub in Queensland, in March 2014.

2015 will be an important period for the industry in Australia. For instance, the price of oil will be under pressure due to the changing global market forces for energy. Operators will have to work hard in 2015 as they commission large new facilities, reduce costs, and improve plant reliability. Also, the regulatory agenda will be focused on exploration, and balancing domestic and export market forces.